Sales of existing homes plunge 8.4% in March

Sales of existing homes plunged at the fastest pace in 18 years in March, falling to the lowest sales pace in nearly four years, the National Association of Realtors reported Tuesday.
Sales of existing homes dropped 8.4% in March to a seasonally adjusted annual rate of 6.12 million, the lowest since June 2004. It was the biggest percentage decline since January 1989, at the start of a severe housing recession.

Economists said the report confirmed that the housing market is still weakening, though the sharp drop in March was likely overstated because of weather. Sales had risen for four of the previous five months before March's decline.



"Unusual seasonal patterns are catching up with the existing-home sales market, revealing the fundamental weakness that persists in housing activity," wrote Celia Chen, an economist for Moody's Economy.com.
"The U.S. housing correction has yet to reach bottom," wrote Sal Guatieri, an economist for BMO Nesbitt Burns. "The key risk remains that further declines in home prices will eventually undermine consumer spending, tipping the economy downwards."
The report was much weaker than expected. Economists surveyed by MarketWatch were expecting sales to fall to 6.45 million. See Economic Calendar.
The data helped push down stocks in early trades. See Market Snapshot.
The details of the report "paint a negative picture on the housing market, but not much different than should have been expected," wrote Tony Crescenzi, chief bond market strategist for Miller Tabak & Co. "In my eyes, nothing new was learned about the housing market today relative to lousy sentiment that already exists."
The report caught the eye of federal lawmakers, who've been debating what they should do, if anything, about the collapse of credit and housing markets. "With a brewing storm of subprime mortgage foreclosures on the horizon, the quickest way to instill more confidence in the overall housing market is to curb the wave of foreclosures," said Sen. Charles, Schumer, D-N.Y., chairman of the congressional Joint Economic Committee.

Median prices
The median price of an existing home fell 0.3% year-over-year to $217,000 in March. Prices have been lower year-over-year for eight straight months, the longest negative stretch in the 39-year history of the report.

One positive sign in the release: The inventory of unsold homes on the market fell 1.6% to 3.75 million, representing a 7.3-month supply, just below the high of 7.4 months reached in November. The inventory figures are not seasonally adjusted.
Sales of condos were unchanged at 800,000 while sales of single-family homes dropped 9.5% to 5.32 million, also the lowest since June 2003 and the biggest decline since 1989. Sales of single-family homes are down 11.9% in the past year.
The median sales price of a single-family home is down 0.9% in the past year.
In a separate report, the S&P/Case-Shiller price index showed home prices in 10 major cities are down 1.5% in the past year, the biggest drop since late 1993. For 20 major cities, prices are down 1% in the past year. See full story.
Regional declines
Existing-home sales fell in all four regions in March. Sales fell 10.9% in the Midwest, 9.1% in the West, 8.2% in the South and 6.2% in the Northeast.
"This number reflects subprime lending" as well as the cold weather in February, said David Lereah, chief economist for the real estate group.
Existing-home sales are counted when they close. Cold weather in February kept buyers away and reduced the number of closings in March. The weather had been unseasonably warm earlier in the winter, boosting sales.
Lereah said he expects sluggish sales in the second quarter, but he thought sales would pick up from March's low. "We're still looking for existing-home sales to gradually improve during the last half of 2007," he said.
In a separate report, the Conference Board said that consumer confidence fell in April to its lowest level since last August. It was the third straight drop in confidence. Consumers' plans to buy homes fell to a 10-year low